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South African central bank governor says disinflation has begun

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South African Reserve Bank Governor Lesetja Kganyago on Wednesday said that the disinflation process had begun, and expected inflation to average 5 percent this year.

Speaking to Reuters on the sidelines of its Global Markets Forum (WEF) in Davos, Kganyago said inflation was still a concern as both global and domestic risks weighed on the outlook.

Kganyago added that despite recent easing in some food price components, domestic food price inflation remained volatile, and had increased in October to 8.7 percent. 

“Despite the rising food costs, annual inflation slowed for the first time in four months in November to 5.5 percent – due to cooling fuel prices, he said.

He further blamed El Niño conditions that had presented longer-term concerns, adding that things  seem to be taking a turn for the better in 2024.

Kganyago however declined to indicate when the central bank would start cutting rates, saying these decisions would continue to be data-dependent.

The South African Reserve Bank targets inflation between 3 percent and 6 percent.

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